Sunday, March 25, 2012

The Republican's Left Winger:Pigou

Energy Policy has become a euphemism for back door tax increases. The Pigou Tax is its leader. Tax the poor, let the rich ride. It is the most regressive tax ever and it make cap and trade look tame. Cap and Trade is a Democrat creation, typical, a Rube Goldberg Government controlled means to reduce gas consumption. Pigou is pure taxation in its intent and execution, tax the life out of it.

But as I have indicated before, the tax takes money from the open economy and places it in the hands of Government, read waste. That is the major concern. Taxing something out of existence does work, painfully, and at times usefully, look at smoking. But it destroys individual wealth at the benefit to politicians. They redistribute. But also gasoline consumption is highly inelastic. Even more so for those on the low end of the economic spectrum.

But the left wingers always see Government as the proper beneficiary of peoples hard work As is stated in Barrons:

Harvard University economist Greg Mankiw, currently an advisor to GOP presidential hopeful Mitt Romney, has long been an advocate of a $1-per-gallon gas-tax hike phased in over 10 years (Romney won't countenance the tax). Absent the tax, politicians resort to crazy, Obama-like schemes to achieve the same end of reducing our dependence on foreign oil supplies.

Yes the same Republican that brought you  health care by law in Massachusetts has an advisor bringing you not cap and trade but a simple $1.00 a gallon INCREASE in your transportation, and just where does that $1.00 go, to the coffers of the same folks in DC that caused the mess. This is a solution? So now where is the difference in these candidates? Harvard Law, mandated health care, taxing the poor for energy .... ? They are starting to look an awful lot alike.

The key problem is defining the issue and then seeking a solution. An economics based solution is but one of many, and that usually entails a tax. On the other hand if the problem is using too much foreign oil, then there are two technical solutions; get more energy from the US itself and/or improve efficiency. These are engineering solutions. Having the Government choose winners or losers in this domain is insane as we again see with the current Administration. However using the heavy hand of economic solutions, mandated taxes, is based upon belief and not facts. The Chinese leadership is dominated by engineers, almost to the extent of banning economists. Perhaps they know something we do not. And oh yes, they have no lawyers.